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PRI reporting framework 2020

You are in Direct – Private Equity » Pre-investment (selection)

Pre-investment (selection)

PE 05. Incorporating ESG issues when selecting investments

05.1. During due-diligence indicate if your organisation typically incorporates ESG issues when selecting private equity investments.

05.2. Describe your organisation`s approach to incorporating ESG issues in private equity investment selection.

The ESG due diligence is performed by an external provider and covers at the following items:

(i) Analysis of the adequacy of the investment to the exclusions and restrictions defined in the ESG policy.

(ii) High level analysis of the geographies and sectors in which the company operates from an ESG perspective. 

(iii) Specific analysis of the company to assess ESG risks and opportunities. 

The ESG Due Diligence process ensures that the following aspects are covered when analysing new investment opportunities:

  1. Respect of workers’ human rights
  2. Maintain safe and healthy work conditions for employees and contractors
  3. Prudent and responsible environmental management of operations, ensuring an efficient use of natural resources as well as mitigation of environmental risks and issues
  4. Maintain high standards of business integrity, avoid corruption in any of its forms and complying with laws and regulation applicable against bribery, fraud and money laundering
  5. Apply a good business management establishing clear responsibilities, procedures and controls and applying best corporate governance practices
  6. Follow as a standard an inclusion and diversity policy

The results of the analysis are included in a conclusions and recommendations report. This report contains details of the most relevant issues from an ESG perspective, to be taken into consideration when making an investment decision. In addition, the report includes recommendations to mitigate the identified ESG risks and identifies the potential ESG opportunities to be tapped during the investment period.

In those cases where the due diligence identifies material ESG risks, Nexxus will require that the investee commits to apply the appropriate measures to mitigate those risks. Nexxus will support the investee by developing action plans with precise objectives, deadlines and resources.

05.3. Additional information. [Optional]

PE 06. Types of ESG information considered in investment selection

06.1. Indicate what type of ESG information your organisation typically considers during your private equity investment selection process.

06.2. Describe how this information is reported to, considered and documented by the Investment Committee or similar.

This information is analysed during the ESG due diligence.The conclusions from the due diligence are incorporated to the Investment Memorandum and submitted to the Investment Committee. In those cases where the due diligence identifies material ESG risks, Nexxus may decide not to invest or may require the investee to apply the appropriate measures to mitigate those risks. The mitigating actions are then included in the 180 days plan or Value Creation plan and subject to periodic monitoring.

PE 07. Encouraging improvements in investees

07.1. During deal structuring,what is the process for integrating ESG-related considerations into the deal documentation and/or the post-investment action plan?.

If yes

07.2. Describe the nature of these improvements and provide examples (if any) from the reporting year

The investments are presented to the Investment Committee for final approval and in the same committe, a 180-day plan is also presented including ESG measures such as good corporate governance and business continuity measures. During the investment phase, at least one of the senior members of the investment team will join the board of directors and will ensure the approval of ESG measures within the framework of the Value Creation Plan.

07.3. Additional information. [OPTIONAL]

PE 08. ESG issues impact in selection process (Private)